Obama Faces Political Risks by Staying Soft on Wall Street

New polling out this week shows that beyond the moral and economic imperatives to holding Wall Street accountable, there are significant political imperatives for President Obama as well.

In five critical states—Nevada, Arizona, North Carolina, Pennsylvania and Florida—a majority of independent voters say the administration is not doing enough to police Wall Street banks in the housing market. Strong majorities of independent voters in each state agree that the economic crisis was caused in part by criminal actions on Wall Street. It’s important to reiterate these are independent voters in purple states.

Here are some highlights from the polling, which was released by the Campaign for a Fair Settlement and conducted by Public Policy Polling:

In the five states polled on the statement “President Obama has not done enough to hold the banks accountable for their role in the housing collapse,” a stunning 69 percent of independent voters in Nevada agree. Obama gets agreement from at or above 60 percent of independents in each state except Florida, where 59 percent agree.

Only 25 percent of Nevada independents disagree with that statement, and the highest number that disagrees is 33 percent, in Florida.

In each state, over 70 percent of voters agree that “the economic crisis we’re in is at least partially the result of criminal actions by Wall Street executives,” with the exception of Florida, where 69 percent agree. In Nevada, 77 percent of independents agree with that statement.

Obama never gets higher than 41 percent approval for his handling of the housing and mortgage crisis (North Carolina). It’s as low as 30 percent in Arizona.

54 percent of independents in both Nevada and Arizona disapprove of Obama’s handling of the crisis, and he’s at 50 percent in Florida.

The poll does not ask specifically about the Residential Mortgage-Backed Securities working group, the investigation into Wall Street criminality leading up to the housing crash. So it’s impossible to know if voters haven’t heard of it or are unsatisfied with the progress—though really, there’s not much of a difference. If the working group doesn’t do anything, which so far it hasn’t, people aren’t likely to know about it.

Ari Berman argued[1] persuasively this week that Obama should follow Elizabeth Warren’s example and make Wall Street accountability a centerpiece of his campaign. It’s a political winner, and I strongly suspect the Obama team knows this but is more concerned with losing financial industry donations. Berman argues this could be replaced with money from small donors energized over the get-tough approach, which may be true.

But the administration’s reluctance may go deeper than simply counting dollars and votes. A hard truth is that there may be many people inside the White House who are just philosophically opposed to going after the financial industry, and who, if they didn’t work in it themselves, have many friends and political allies there.

If that’s not the case, it’s clear that broad swaths of voters would, and do, believe it—and the onus is on the White House to convince them otherwise.